Intermountain Health Care pays $25.5M to settle Stark claims

Utah's largest healthcare system self-disclosed the compliance issues

Intermountain Health Care, Utah's largest healthcare system, has agreed to pay $25.5 million to settle claims that it violated the federal Stark law and False Claims Act by engaging in improper financial relationships with referring physicians, the Justice Department said Wednesday.

The Stark Statute restricts the financial relationships that hospitals may have with physicians who refer patients to them.

The relationships at issue included employment agreements under which the physicians received bonuses that improperly took into account the value of some of their patient referrals; and office leases and compensation arrangements between Intermountain and referring physicians that violated other requirements of the Stark Statute, according to Stuart Delery, acting assistant attorney general for the department’s Civil Division.

"The Department of Justice has longstanding concerns about improper financial relationships between health care providers and their referral sources, because such relationships can corrupt a physician's judgment about the patient's true healthcare needs. In addition to yielding a recovery for taxpayers, this settlement should deter similar conduct in the future and help make health care more affordable for patients,” Delery said in a news release.

These issues were disclosed to the government by Intermountain in 2009. Through its regular review processes, Intermountain discovered some areas where it might be out of compliance and “promptly and voluntarily” disclosed them to the U.S. Attorney for Utah for review and were corrected, said Brent Wallace, MD, Intermountain Healthcare chief medical officer.

“Intermountain's management recognized that potential penalties could be significant, but at no time was there ever any consideration given to not self-disclosing the issues,” he said in a news release.

Wallace said that the claims involved technical matters, such as lack of proper paperwork involving leases of physician offices and service agreements.

“We are embarrassed that these issues occurred and regret that our controls at the time were inadequate to properly monitor these matters,” Wallace said, adding that Intermountain has learned from this experience and is a better company as a result.

Among its changes, Intermountain has improved its controls by establishing a rigorous centralized process to track all physician agreements. Intermountain added additional staff, implemented advanced tracking software, created oversight councils, and put additional training in place to assure compliance with all relevant regulations. Intermountain will continue the practice of regularly evaluating and monitoring all business practices to ensure legal and regulatory compliance, Wallace said.

The claims settled by this agreement are allegations only, and there has been no determination of liability, according to the DOJ.

“So I applaud Intermountain for recognizing their liability and coming forward to self-disclose these violations,” he said.

This resolution is part of the Obama administration’s emphasis on combating healthcare fraud and another step for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, a partnership since 2009 between DOJ and HHS to reduce and prevent Medicare and Medicaid financial fraud through cooperation.

DOJ has used the False Claims Act to recover more than $10.2 billion since 2009 in cases involving fraud against federal healthcare programs.

The case was handled by the Justice Department’s Civil Division, the United States Attorney’s Office for the District of Utah, the HHS Office of Inspector General, and the Centers for Medicare and Medicaid Services.

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